A global fair trade: Unctad's lesson

The global power-balance is being changed by the rise of the non-western "Brics" states. This makes the pioneering work of a body committed to linking trade and development in the interest of the world's poor more relevant than ever.

A paradox of the current political and media world is that the intergovernmental body with the best record in supporting the interests of the poorest gets the least attention and support. The World Bank, the International Monetary Fund (IMF) and the World Trade Organisation (WTO) seem everywhere, but another institution with key global responsibilities - the United Nations Conference on Trade and Development (Unctad) - finds itself consistently sidelined by the most powerful states.

This seems especially strange in light of Unctad's record, which include its prescient warnings over the years of the dangers of industrialised countries accumulating unsustainable debts. As early as 1997 it "cautioned against the downside risks of finance driven globalisation" (see Ravi Kanth Deverakonda, "The Battle over Development-Led Globalisation", TerraViva/IPS, 6 April 2012).

Unctad maintains a secretariat in Geneva, with its main negotiating forum a quadrennial conference; the next one will be held in Doha on 21-26 April 2012. The agenda includes setting Unctad's work for the next four years - and it is here that powerful western states are working to limit the body's role. Their intention, backed by a sustained campaign, is to prevent Unctad giving policy advice to some of the world's poorest countries on the grounds is that this is the prerogative respectively of the IMF (over financial issues) and the WTO (over trade).

In one sense this rich-world plan is no surprise, in that in its inception and since its early years Unctad's main focus was and has been the interests of the poorer countries. Its very formation in 1964 was owed to the arrival of numerous former colonies joining the UN as independent states, able to articulate resentment at a world trading system skewed against their economic interests - and exerting moral, political and intellectual pressure that was impossible to ignore.

Unctad's first head was the Argentine economist Raul Prebisch (1901-86), himself appointed by the then UN secretary-general, U Thant. The scheduling of its first conference in Geneva in 1964 inspired Prebisch and a team of economists to published a set of proposals that linked trade reform to improved development chances.

Towards a New Trade Policy for Development - always better known as the "Prebisch report" - advocated policies that were progressive in the context of the time, and directly counter to later free-market orthodoxy. A key item was commodity agreements designed to provide stable prices for commodity exports from the "third world". These would be negotiated between the main producing and consuming states, and would be backed by buffer stocks and a compensatory finance system to protect poorer countries suffering from temporary problems (such as poor harvests).

Prebisch's further recommendations were a tariff-preference system, poor-country involvement in invisibles such as insurance and transport, improved development assistance and schemes for regional industrialisation across what would later be termed the "global south".

The switchback

Unctad's first eight years were a struggle to establish such concerns on the international policy agenda, as powerful states sought to maintain the status quo even in the face of deteriorating terms of trade for many in the south. But by Unctad's third session in 1972 in Santiago, Chile ("Unctad III"), a change in the global climate was becoming apparent; over the next two years, in the context of a general increase in commodity prices, oil producers were becoming more confident, the richer states were starting to feel vulnerable at ther growing dependency, and pressure for a change in the overall balance accelerated.

In early 1974, a special session of the United Nations general assembly was convened which led to the call for a "new international economic order" (NIEO). Unctad itself argued for an "integrated programme for commodities" as a core part of the NIEO and - with the poorer states able by then to wield some negotiating power - this was agreed even over entrenched opposition.

The programme was to be negotiated at Unctad IV in 1976, in Nairobi. But by then economic stagnation had set in, commodity prices had fallen back, and the richer states were no longer interested in managed world trade. The ideological tide turned to the right over the next few years, and by the early 1980s the ideas underpinning the NIEO were becoming anathema. The "Washington consensus" emerged as a new othodoxy that guided the World Bank and IMF's imposition of radical austerity across much of the south.

The prospect

The forthcoming Doha meeting will be Unctad XIII - and the number, representing thirty-six years since the landmark Santiago conference and its aftermath, indicates for just how long the body has been trying to present a different worldview. Unctad has also acquired an unfortunate reputation, as "under no circumstances take any decision" - though that is largely a reflection of where international financial power lies. Yet it survives, and its very existence - and refusal to embrace the now-discredited free-market consensus - is an embarrassment to the world's traditional economic bastions.

But if the latter's position is predictable, it is more dismaying that emerging powers in the global south are so reluctant to support Unctad. The "Brics" states (Brazil, Russia, India, China and South Africa) now have the clout to support Unctad, but - says the LSE's Robert Wade - with the exception of South Africa show little inclination to do so.

The other four Brics, in resisting Unctad's planned agenda of backing the weaker states, "have remained largely passive in the face of [the] roll-back. They each appear to give greater priority to their new opportunities for negotiating in small groups with the major developed countries, including through the Group of 20 process. So major western countries feel they do not have to negotiate seriously on the issues that the developing countries want Unctad to work on" (see Robert Wade, "Support for Unctad could make a real difference", Financial Times, 3 April 2012).

The Prebisch report, reread after almost half a century, strikingly resembles a blueprint for just the kind of trade system that activists and the "fairtrade" movement are today arguing for. Its emphasis on the need to link trade and development in systematic fashion is more relevant than ever. So it is vital that Unctad is allowed to maintain and advance this agenda. But given the realities of global power, don't hold your breath.

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